The coronavirus pandemic has presented the hospitality industry with enormous challenges, with hotels operating on wafer thin margins thanks to the necessity of social distancing measures and other essential precautions.
Given the current climate, hotels need to do what they can to maximise revenue, and a strategic approach to direct bookings can play a key part in this.
Intermediary booking channels (as opposed to direct), such as OTAs, have long held a monopoly on generating bookings, thanks to their prominence in Google search rankings.
Taking away from OTAs
At present though, hotels are well placed to take the impetus away from OTAs and thereby remove the unnecessary expense of commission fees.
But why are hotels so well placed? Well, like the rest of the industry, OTA bookings stopped practically overnight with the advent of lockdown.
The uncertainty created by the pandemic meant both OTAs and hotels paused marketing activity almost immediately, with the result being, not just a massive fall in bookings, but a huge drop off in website traffic too. People simply weren’t looking for hotel stays.
One thing UK hotels have benefited from though is insight given by other countries who’ve lifted lockdown measures ahead of us – offering us a glimpse into the future.
Taking Poland and Germany as examples (which lifted lockdown measures in early May), and using Profitroom’s live dashboard analysis tool that looks at data from 3,500 hotels across the world, we’ve seen new booking trends emerge – including a gradual recovery in booking volume, as well as a clear move towards a faster turnaround on direct bookings, with guests looking to book direct hotel stays for the near future.
A Polish hotel group called Grano Hotels for instance, had previously experienced a healthy 50% share of direct bookings, but post-lockdown is now enjoying a 65% share of direct bookings – something that really helps to improve their margins.
Between March and April, with lockdown at its height, our data shows that traffic to hotel websites had almost disappeared, painting a very bleak picture. However, as governments lifted restrictions, this traffic began to bounce back, rising rapidly as people reconsidered their holiday plans.
It was here, as reopening began, that an efficient direct booking strategy really came into its own.
Port Lympne, for example, a hotel and reserve in Kent, experienced a booking almost every 11 seconds in the wake of announcing reopening.
This was unprecedented demand but, thanks to the utilisation of online sales tools and automated booking quotations as part of their existing strategy, Port Lympne kept up with this demand, enjoying a huge, much-needed boost to its revenue.
If the hotel had been relying on reception alone to handle this influx, it simply wouldn’t have coped, with bookings lost as a consequence.
Hotels add enticing extras to encourage bookings
To encourage direct bookings, hotels often add enticing extras. This might take the form of additional meals, spa treatments, ‘best rate guaranteed’ or other bonuses, all of which are made exclusively available via hotels’ direct channels – a move which helps the guest to recognise the value of booking directly.
Even with the added cost of offering these extras, hotels still reap the revenue rewards. Using our analysis tool, we’ve seen an average 50% increase in the Average Room Rate via direct channels when compared against OTAs.
With the absence of natural demand and international visitors restricted (and intermediary portals not in a position to generate bookings), the ability of hotels to create interest in their offering has also proven to be crucial.
Hotels need to utilise the existing tools at your disposal. If you have a strong brand and extensive databases (with marketing consent) then you’re perfectly placed to generate bookings. Using CRM systems, you can run dedicated marketing campaigns, including targeted remarketing – helping to put your brand in front of people who’re already familiar, and therefore more likely to book.
Alongside better value for the guest, a central benefit of direct bookings is security. Hotels themselves shape return policies, can communicate directly with guests, and can offer alternatives, which is something not necessarily offered in the return policies of leading OTAs. Dealing with bookings directly leaves both the power and the flexibility with the hotel itself.
We’ve seen that those hotels who have invested during the ‘quiet’ times in working to build a strong brand and develop direct relations with guests have reaped the benefits post-lockdown.
Our data analysis shows that it was these who were the first to record significant booking increases, helping to drive the global rise in bookings that appeared immediately after reopening.
With people simply not searching online for hotel bookings, OTAs were effectively impotent and unable to generate demand. Hotels with strong brands and large databases however were the first to entice guests back, drawing guests in to book directly, which then created a wider, ongoing trend of direct booking.
Taking advantage of heightened demand
With demand currently heightened, hotels need to take advantage and aim to expand their base of ‘loyal’ guests. With trends seeing guests currently bypassing OTAs, hotels need to develop engagement that will keep guests within their sphere of influence – preventing them from simply returning to OTAs in a few weeks/months.
This can be done in several ways. CRMs, for instance, are designed with this very engagement in mind helping to generate authentic, yet automated contact that helps to draw guests in and build a relationship. If people have consented to marketing – then it offers the perfect audience to generate bookings, so getting this consent is crucial.
Once you have guests visiting your website, you need to make sure that your booking portal is simple to use and that you have clear CTAs. It’s difficult enough getting guests to come to your website, so once there, you need to capitalise on this, presenting a seamless, straightforward booking process that makes it easy to do so.
If you make a good impression now, when more and more guests are visiting hotel websites directly, then you’ll help to convince them that – in the future – going direct is the way forward.
Establishing a comprehensive direct booking strategy will allow you to acquire bookings at a lower cost, helping you to rebuild revenue following enforced closure.
The success of this strategy is dependent on a variety of factors, but those hotels who work to implement it will see rich rewards.
By Samantha Williams, the UK Market Owner for Profitroom, a leading SaaS provider of hospitality booking solutions and direct strategies